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Baltics Are Fertile Ground for Private Equity THE WALL STREET JOURNAL EUROPE. 1200 Brussels Auflage 5 x wöchentlich 100'216 1077237 / 229.28 / 44'704 mm2 / Farben: 3 Seite 25 11.10.2007 Balticsarefertile ground for private equity funds, has been chosen as a strate- 2002, sold this year for a profit of Growing economies gic partner for the $575 million €38 million. The €450 million acqui- management buyout of Latvian in- sition of Bite ranked as the largest attract investment; formation-technology and telecom- buyout in the Baltics and among the munications company SIA Lattele- largest in central Europe. inflation a concern? corn Group. Blackstone is to invest The firm has raised more than $178 million for a 51% stake in Lat- €1 bfflion for buyouts in central Eu- By JASON CORCORAN telecom, which is majority-owned rope, a record for the region. by the government. Mr. Butcher says the pipeline The Baltic countries of Lithua- While Blackstone has no plans for investments of between €50 mil- nia, Latvia and Estonia are revving to setup shop in Latvia or set aside lion and €200 million in equity re- up their economies—and emerging regional allocation, the group said mains strong. He said: "We have a as new hunting grounds for private- it would look at individual deals in large pipeline of deals in various equity firms looking to make deals. the area on merit. things in the Baltics, which may or All three former Soviet repub- "This is our first foray into the may not come to something. We lics joined the European Union in Baltics. The deal's been approved are looking at consumer lending, 2004 and have experienced a con- by the legislature, but it's nottransportation and infrastructure, sumption boom that has driven a closed yet because we need regula- retail, telecoms and broadcasting." surge in economic growth. Estonia tory approval," a Blackstone spokes- Private-equityfirmBaltCap, and Latvia were the two fastest- man said. "All our funds are global. which has offices in all three coun- growing economies in the EU last We have no specific sector alloca- tries, is raising a €100 million fund, year—Estonia's gross domestic tion or a regional one, and we will having made three investments from product grew 11.4%, while Latvia's invest in the region again if we a €50 million fund raised in 200L economy surged 11.9%. think we can add value." "The Blackstone deal is signifi- But that strong growth has Lots of other big private-equity cant because these funds have been fueled inflation and driven current- players are also testing the waters. overlooking us," said BaltCap man- account deficits to record highs. The Carlyle Group is scouting for oppor- aging partner Peeter Saks. "Each environment demands caution from tunities in the Baltics and through- private equity and fund managers as out Central and Eastern Europe country is tiny on its own but to- they go about choosing their deals. from its new office in Warsaw. MG gether we are the size of Sweden, "The most likely scenario is aGlobal Investments is trawling the and the three states are homoge- soft landing, although we are con- same ground for its €523 miffion neous, especially for certain sec- cerned about Latvia and the risk of($738 million) New Europe fund. tors such as telecoms and mobiles." psychological contagion in the But the region remains the pre- BaltCap looks for investments of other markets," says Marcus Sved- serve of small domestic funds and between €5 million and €15 million. berg, chief economist at Nordicmidmarket regional players such In June, the firm sold its minority fund manager East Capital. as Advent International, Argus position in mobile virtual-network The posterchild forthe private- Capital, Enterprise Investors andoperator Zetcom to the telecom equity push is Skype, the Internet Mid Europa Partners, which have unit of Latvijas Energoceltnieks, phone-call phenomenon. Draper established relationships with lo- for an undisclosed amount. It also Fisher,a venture-capitalfirm, cal financial institutions for sourc- recently exited a position in Baltic made a 100-fold return on itsinvest- ing and executing deals as well as ment uiSkype'wtfnit was sold to for co-investment opportunities. online auctioneer eBay Inc. for Craig Butcher, a founding part- $2.6 billion in 2005. Skype allows ner at Mid Europa, said: "You have users to make unlimited free calls to be opportunistic because these over the Internet to anywhere inare smaller markets than we pre- the world. The company, which has fer. Lithuania has four million peo- its main office in the Estonian capi- ple, Latvia 2.3 million and Estonia tal of Tallinn, was founded by a pair 1.3 million." of Swedes, but the software was de- Mid Europa has made two invest- veloped by Estonians. ments: Latvia and Lithuania mobile Now Blackstone Group, one of operator UAB Bite Lietuva, in Febru- the world's largest private-equityary, and Baltic Rail Services in Argus Ref 28727062 Ausschnitt Seite 1 / 2 Bericht Seite 84 / 175 THE WALL STREET JOURNAL EUROPE. 1200 Brussels Auflage 5 x wöchentlich 100'216 1077237 / 229.28 / 44'704 mm2 / Farben: 3 Seite 25 11.10.2007 __________________________________________________ office-supplies company DAB Daily Booming Baltics Service fbi a 35% return. While secondary placements Top 10 private equity deals in Lithuania, Latvia and Estonia are the favored option forexits, Mr. Deal value, Target (Natioqwlity) Acqu[rer in millions Saks said liquidityon theregional OMX exchange was also attractive UAB Bite Lietuva (Lithuania) MEP 683.4? for initial public offerings. SIA Lattelecam (Latvia) Blackstone Group 582.56 AltaCapital, an Estonian finn, isexpanding with investments in UAB Palink (Lithuania) CiUgroup Venture capital 53.00 foodand fashion. It controls agrow- UAB Eniro Lietuva (Lithuania) Interinfo Baltic 1077 lug range of fashion and lingerie brand names in the Baltics and has Starman (Estonia) Emerging Europe Capital mv 9.33 acquired a Latvian AS Delfi (Estonia) Findexa AS company and biofuel developer. 7.54 Thefirm,which hasoffices intJie AS Connecto (Estonia) Eltel Neworks Oy 5.08 Balticcapitals ofRiga, Tallinn and CV-Online (Estonia) NewEconomyVentures 0.38 Vilnius,was setupin 2001 by former investinentbankers.Altafounderln- VABMicroLink Lietuva (Lithuania) AS Martinson Trigon 0.25 drek Rahumaasaid the fundhadno UAB Baltijos Kompiuterlu (Lithuania) specific investment horizon, which AS Martinson Trigon allowed his team to manage invest— AS of Oct. 10 Soo,w: Thomson 1inociI mentswithalong-termviewtooper- ational development. Mr. Rahumaa said Alta was building aportfolio of regional com- panies capable of operating in the three states and the Polish market. We believe transforming local players into regional companies de- creases the operational, sales and marketing pressures that smaller companies are lacing due to the in- creased proportion of chain retail- ers and their bargaining power," he said. Alta has also moved into real es- tate and energy and owns Alta Real Estate Partners and Latvijas Erser- goceltnieks, which is involved in en- ergy and telecommunication infra- structure projects. Argus Ref 28727062 Ausschnitt Seite 2 / 2 Bericht Seite 85 / 175.
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